The 4% rule is not carved in stone. If you want a rule to carve in stone, use the 3% rule. But if you are willing to think, read and use common sense, 4% is a good starting point. The actual percentage depends on how much of your funds are in IRAs as opposed to investment accounts, assumes you follow a rather specific set of investment rules, how long you expect to live (20 years, 30 years, more than 30 years - which is considered forever) and what level of risk you are willing assume. By risk assumption I mean are you willing to accept 5% chance some very uncommon thing happens and you will run out of money if you do not adjust your spending? What would be an odd event you might ask. How about the next 20 years being as bad for investments as the last 10? In our specific situation we decided that 3.8% was our withdraw rate.

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